IndusInd Bank on Tuesday reported a 30% year-on-year rise in its net profit for the December quarter with an improvement in the asset quality and the net interest margin. In an interaction with reporters, Romesh Sobti, managing director and CEO, talks about the bank’s wholesale-retail mix, a tie-up with PayUmoney and his outlook on interest margins. Excerpts…

What is the wholesale-retail mix currently and where do you see it going?

The mix on wholesale vs retail, which used to be 60-40 (%), has actually moved up to 56-44. So, we are trending in the direction that we want to trend in and this 56-44 is on the basis of the diamond portfolio not being considered because that came and sat on top of the corporate book. So, that mix is moving in the direction that we want and the more it moves in this direction, the more beneficial it is for yields.

What is your outlook on NIM going forward?

We don’t give guidance on outlook, but I think that as cost of deposits falls, and the fact that we have a fixed rate book holds up our margins. So we see stability in our interest margins with an upward bias.

You had said last quarter that you were in the process of evaluating tie-up with a payments bank. Is there any development on that front?

A tie-up has been done. We have tied up with PayUmoney and it is a collaboration. This is a really big one. If you see the spread of PayU, and the scoping of this collaboration, we think it is a game changer. It is an exclusive tie-up.
What is your outlook for the real estate sector? There have recently been some concerns surrounding certain pockets of real estate. Have you gone cautious on the sector?

The important thing to look at is what we do with LAP (loan against property). What we do is to finance cash flows.

It is not asset-based lending. Home loans are asset-based lending. This is for meeting small business owner’s need to bring in equity by mortgaging his/her property. The primary assessment is of the cash flows of the business and secondary is the mortgage of the property. Mostly, it will be mortgage on residential property. What you do with LAP is very important and right now our delinquencies are less than 50 basis points and we would like to keep it that way.

Can you tell us how many loans you have sold to asset reconstruction companies in the quarter gone by?

The SR (security receipt) book has moved up a net Rs 31 crore. We have sold Rs 53 crore worth of loans to asset reconstruction companies and we have recovered around Rs 22 crore.